iPhone Money

How much money Apple makes with each iPhone?

Part of every $400 retail sales, probably 15%, so that is around $60 each. But this is only the most obvious part.

Steve Jobs also gets a cut from the owner’s cell phone bills, voice and data. Unlike other handsets, iPhone is not open. It works only on the networks of the authorized carriers, e.g. AT&T in the USA, that leverage exclusivity for marketshare.

IPhones owners all subscribe to various internet services. Since they access these services via an exclusive carrier and an unique device, the device became an interesting aggregator. If an advertiser wishes to access this most affluent segment of the consumers, they must pay the exclusive carrier and Apple, the near exclusive music supplier already.

Steve Jobs once stated,

The problem, of course, is that there are many smart people in the world, some with a lot of time on their hands, who love to discover secrets and publish a way for everyone. They are often successful in doing just that.

There are many smart people who like iPhone but hate the exclusivity nature of it. They have a lot of time on their hands and often successful hacking the protections.

I have encountered many iPhone users in China. They proudly show off the cool gadget and enjoy using it. The fact that iPhones are not sold or supported in China is hardly a deterrent. Walk into a store, ask for an iPhone, the clerk will give you a choice of hardware or software “unlocking” scheme. In China, iPhones cost $50 to $100 more, the smuggling and hacking surcharge.

China has more than twice the number of cell phone subscribers than the US. And China Mobile dominates the market. It is not hungry to for a competitive edge as the exclusive carrier for iPhones. By waiting, Apple becomes vulnerable to copycat products.

Take the money when it is still on the table, Steve.